FRIDAY JULY 27, 2012

I used to say Obamacare was a term used by people who don’t like the Affordable Care Act, but I recently heard that the President himself has embraced the term. This week, the nonpartisan Congressional Budget Office released a revised report on the fiscal impact of Obamacare following the U.S. Supreme Court’s decision to allow states the option of not expanding Medicaid. Immediately, politicians said it meant one thing (a massive federal spending program that the country can’t afford) or the other (a coverage strategy that also reduces the deficit). I thought I would do my best to give a couple of dispassionate facts from the report.

The CBO says:

The Supreme Court ruling allowing states to opt out of Medicaid expansion means that about 3 million fewer Americans will be insured as part of Obamacare. (In its original form, the law was expected to extend coverage to an estimated 33 million people.)

Another 3 million people who will not be eligible for Medicaid if their states choose not to expand will be eligible for subsidies to purchase their own insurance through the health insurance exchanges slated to open in 2014.

The federal government’s savings from the average individual who does not enroll in Medicaid is estimated to be $6,000 per person in 2022. But if that individual enrolls in an exchange instead, the federal spending per person will increase to $9,000 on average due to the required federal subsidy.

Because of the 3 million fewer people being enrolled in Medicaid the law is expected to cost $84 billion less than original estimates over a 10-year period, for a total cost of $1.168 trillion over the decade. The original estimate had been $1.252 trillion.

Repealing the entire law would increase the federal deficit by $109 billion over 10 years because the repeal would eliminate some new taxes and cuts to Medicare contained in the law. While the government would save $1.171 trillion by repealing the coverage provisions of the law, repealing the entire act would reduce revenues by a total of $1.28 trillion.